The blood in the streets will be beyond any imagination of the interest rates are increased 3%.
2 years before Covid I signed onto a $650k SBA loan after providing $300k in cash to build out a new Dairy Queen Grill and Chill end cap at a shopping center. I lost a lot of sleep, SBA loans require collateralizing the entire loan with other assets if you don't own the underlying property.
I did not proffer my personal home, but most all of my rental properties (except those hidden in trusts) were exposed. Covid hit and at $18,000 a month to service the rent and loan things were not pretty as I shelled out more cash to protect my investment and pay employees.
Uber, Door Dash, and our drive thru saved the ship from sinking. Later Joe B started passing out the loot to our landlord and the bank servicing the loan. All payments were suspended until further notice. I decided we'd pay the loan down with both the deferred rent money and the loan as usual, but to double down with all spare cash.
Joe B smiled on us again providing an employee retention credit of $150k which has been applied to the loan. In short the loan is now in the range were I could pay if off with cash. I'm not wanting to do that unless necessary.
Now if you think anyone else with a SBA loan did the same dream on. We've become quite close with the executives at the bank. They were quite surprised the loan payments were doubled and sometimes tripled during Covid. The original loan was 6.75% today it stands at 8.5%.
I sold a 21 unit apartment building before the DQ was offered us, I was going to retire (the wife didn't want me underfoot). The new owner of the apartment building paid too much and borrowed too much. He's looking for a partner, sorry pal the second happiest day in my life was buying those buildings for peanuts, the happiest day was selling them to you. I might buy the lot back out of foreclosure but because they are in Philly where an eviction now takes 5 months if you hire a lawyer and act quick about it, I'll probably pass.
Both DQ's rocked during Covid, suicide by ice cream is all I can figure. Currently 2 of our local DQ's have gone out of business. I believe both succumbed to increased labor and food costs. The Grill and Chill is an interesting situation, the dining room is not like it used to be but Uber and other delivery systems along with the drive through have increased cash flow. DQ is exploring a new idea and using my son in law (the manager and part owner as their Beta test site. He's planning on opening a new location void of a dinning room. It will have a pick up counter, drive through, and delivery service.
He's funding this location 100% without my wife and I. I'm good with that, let the young people loose sleep.
Mr. Bonner: A correction regarding human anatomy is in order. Humans, even Mr. Powell, do not have a lower mandible. They have a mandible. The moveable (lower) bone of the jaw is the mandible. The fixed (upper) bone of the jaw is the maxilla. Yes, Mr. Powell's mandible seems to be abnormally powerful.
Very good reporting as always. Now, go to the Ranch and become the Leader of the ORIGIINARIOS! Will would probably appreciate the help. Just Saying! Florida Jimmy.
I love your writing Bill,and only note (tongue firmly in cheek) that the really big surprises are not to the downside (in that they are expected) but how much we have seen rallies to the upside after rates have increased so rapidly! Keep your valuable insights coming and best wishes for South America!
I DON'T UNDERSTAND HOW RAISING THE INTEREST RATE WILL CURE INFLATION WHILE THE CONGRESS RAISES THE DEBT CEILING WHENEVER THEY NEED A "LITTLE" SPARE CASH.
SOMEONE IN WASHINGTON DC NEEDS TO UNDERSTAND A BALANCED BUDGET AND PUT FORTH A LONG TERM PLAN TO PAY OFF THE FEDERAL DEFICIT. IF NOT WE GO OUT OF BUSINESS LIKE THE COFFEE SHOP OWNER.
Bill writes extensively about it; in one book he enumerates a slew of things, that in a pinch, can be money, like forever stamps.
He preaches about the coming digital money and recommends hoarding dollars in case the ATM machines stop working.
Yet, he hellishly rails against Bitcoin.
Bitcoin, in a collapse, could be money, if you have your own secure wallet. Supposedly the price just went up because governments had to pay off blackmailers.
I was wondering, when governments turn digital, will my saved greenbacks have increased value since they are already scarce and people are used to accepting them, could be rampant counterfeiting.
I am glad Bill is going back to Argentina, I thought last year he was almost arrested.
I enjoy the ranch stories and the originarios . Wish he could still do those horse rides. Is the old lady, high up, still alive?
The US is becoming Argentina. You would think that when crazy leadership creates a disaster, the people would rise up for change.
Argentina, is a disaster that continues a disaster, maybe because of the obtuseness of its people, no matter how personally friendly, they keep accepting disaster after disaster.
More stories about that phenomena because I was hoping that the disaster the US finds itself in would bring about good change. Obviously, I am wrong.
Argentina is interesting. I find myself enamored with stories of life in Cafayate, wishing I was there eating steak and drinking Malbec. It’s a “pretty” picture.
I loved it when I traveled there as a peon, in 1970, when Mendoza was an amazing place and I trekked across the the Andes mountains to Chile. The heart never gave up those hard won vistas.
The Balance of Power eradicates the dysfunctional aonglemetary of the fiscal nuance that absolutely simplifies the invasive tax code procured by government meddling in the affairs on non sequential bipartisan entities.
You Left Wing Pundit, Warren Buffett/Troy Bader $600 million long term 1998 fiscally attuned hedge-fund inflation security investment.
The Star-edge eats a stackburger with extra salad on board the Blizzard and Elon Musk controls global transflation.
Thank you Dennis T,for your personnel small business story,and the other's small business stories.Having had my own small business it rings a bell on all that you say.This is business 101,that I don't believe they teach in business school.Small busienss's are so fragile with all the regulations passed by our Federal and state Governments,the Federal Reserve.as well as the I.R.S.Small business's put their families,as well as all their assets on the line to succeed or fail,and work 24/7 to make it happen.Small business is one of the important ingrediants that built pride in this great country.You don't create small business owner's or Farmer's from the unemployment line,its in their blood or it isn't. When our Government officials wake up(doubtfull) and realize there is a herd of White elephants
in our system (too much Government presence in our free enterprise system) its way too late.Sort of like Transitory Inflation.Mr.Powell can't hold a candle to Mr.Volker,and President Biden should read the book about President Jimmy Carter's years of battling inflation,by the way he was a small business owner, one of the few.Thanks
The blood in the streets will be beyond any imagination of the interest rates are increased 3%.
2 years before Covid I signed onto a $650k SBA loan after providing $300k in cash to build out a new Dairy Queen Grill and Chill end cap at a shopping center. I lost a lot of sleep, SBA loans require collateralizing the entire loan with other assets if you don't own the underlying property.
I did not proffer my personal home, but most all of my rental properties (except those hidden in trusts) were exposed. Covid hit and at $18,000 a month to service the rent and loan things were not pretty as I shelled out more cash to protect my investment and pay employees.
Uber, Door Dash, and our drive thru saved the ship from sinking. Later Joe B started passing out the loot to our landlord and the bank servicing the loan. All payments were suspended until further notice. I decided we'd pay the loan down with both the deferred rent money and the loan as usual, but to double down with all spare cash.
Joe B smiled on us again providing an employee retention credit of $150k which has been applied to the loan. In short the loan is now in the range were I could pay if off with cash. I'm not wanting to do that unless necessary.
Now if you think anyone else with a SBA loan did the same dream on. We've become quite close with the executives at the bank. They were quite surprised the loan payments were doubled and sometimes tripled during Covid. The original loan was 6.75% today it stands at 8.5%.
I sold a 21 unit apartment building before the DQ was offered us, I was going to retire (the wife didn't want me underfoot). The new owner of the apartment building paid too much and borrowed too much. He's looking for a partner, sorry pal the second happiest day in my life was buying those buildings for peanuts, the happiest day was selling them to you. I might buy the lot back out of foreclosure but because they are in Philly where an eviction now takes 5 months if you hire a lawyer and act quick about it, I'll probably pass.
Both DQ's rocked during Covid, suicide by ice cream is all I can figure. Currently 2 of our local DQ's have gone out of business. I believe both succumbed to increased labor and food costs. The Grill and Chill is an interesting situation, the dining room is not like it used to be but Uber and other delivery systems along with the drive through have increased cash flow. DQ is exploring a new idea and using my son in law (the manager and part owner as their Beta test site. He's planning on opening a new location void of a dinning room. It will have a pick up counter, drive through, and delivery service.
He's funding this location 100% without my wife and I. I'm good with that, let the young people loose sleep.
Mr. Bonner: A correction regarding human anatomy is in order. Humans, even Mr. Powell, do not have a lower mandible. They have a mandible. The moveable (lower) bone of the jaw is the mandible. The fixed (upper) bone of the jaw is the maxilla. Yes, Mr. Powell's mandible seems to be abnormally powerful.
Personally, I think the FED Funds rate should be automatically adjusted and kept out of the hands of Central Bankers.
The FED Funds rate should always be 1.5% above the rate of inflation.
Which inflation measure needs to be determined.
I would prefer a LEADING indicator such as PPI or PCE rather than a lagging indicator like CPI.
This would keep legislators 'in check' as it would reveal reckless spending habits, and money and debt creation.
Just my two cents...
Very good reporting as always. Now, go to the Ranch and become the Leader of the ORIGIINARIOS! Will would probably appreciate the help. Just Saying! Florida Jimmy.
I love your writing Bill,and only note (tongue firmly in cheek) that the really big surprises are not to the downside (in that they are expected) but how much we have seen rallies to the upside after rates have increased so rapidly! Keep your valuable insights coming and best wishes for South America!
I DON'T UNDERSTAND HOW RAISING THE INTEREST RATE WILL CURE INFLATION WHILE THE CONGRESS RAISES THE DEBT CEILING WHENEVER THEY NEED A "LITTLE" SPARE CASH.
SOMEONE IN WASHINGTON DC NEEDS TO UNDERSTAND A BALANCED BUDGET AND PUT FORTH A LONG TERM PLAN TO PAY OFF THE FEDERAL DEFICIT. IF NOT WE GO OUT OF BUSINESS LIKE THE COFFEE SHOP OWNER.
I am puzzled about money.
Bill writes extensively about it; in one book he enumerates a slew of things, that in a pinch, can be money, like forever stamps.
He preaches about the coming digital money and recommends hoarding dollars in case the ATM machines stop working.
Yet, he hellishly rails against Bitcoin.
Bitcoin, in a collapse, could be money, if you have your own secure wallet. Supposedly the price just went up because governments had to pay off blackmailers.
I was wondering, when governments turn digital, will my saved greenbacks have increased value since they are already scarce and people are used to accepting them, could be rampant counterfeiting.
I am glad Bill is going back to Argentina, I thought last year he was almost arrested.
I enjoy the ranch stories and the originarios . Wish he could still do those horse rides. Is the old lady, high up, still alive?
The US is becoming Argentina. You would think that when crazy leadership creates a disaster, the people would rise up for change.
Argentina, is a disaster that continues a disaster, maybe because of the obtuseness of its people, no matter how personally friendly, they keep accepting disaster after disaster.
More stories about that phenomena because I was hoping that the disaster the US finds itself in would bring about good change. Obviously, I am wrong.
Argentina is interesting. I find myself enamored with stories of life in Cafayate, wishing I was there eating steak and drinking Malbec. It’s a “pretty” picture.
I loved it when I traveled there as a peon, in 1970, when Mendoza was an amazing place and I trekked across the the Andes mountains to Chile. The heart never gave up those hard won vistas.
So, I am glad Bill is going back to Argentina.
I smell new mates, sweet meat pies!
The Balance of Power eradicates the dysfunctional aonglemetary of the fiscal nuance that absolutely simplifies the invasive tax code procured by government meddling in the affairs on non sequential bipartisan entities.
You Left Wing Pundit, Warren Buffett/Troy Bader $600 million long term 1998 fiscally attuned hedge-fund inflation security investment.
The Star-edge eats a stackburger with extra salad on board the Blizzard and Elon Musk controls global transflation.
"When they borrow, the banking system ‘creates’ new money to give them."
It would be good to have an explanation of how the Fed and the banks create and uncreate money and how fractional reserve banking works.
Thank you Dennis T,for your personnel small business story,and the other's small business stories.Having had my own small business it rings a bell on all that you say.This is business 101,that I don't believe they teach in business school.Small busienss's are so fragile with all the regulations passed by our Federal and state Governments,the Federal Reserve.as well as the I.R.S.Small business's put their families,as well as all their assets on the line to succeed or fail,and work 24/7 to make it happen.Small business is one of the important ingrediants that built pride in this great country.You don't create small business owner's or Farmer's from the unemployment line,its in their blood or it isn't. When our Government officials wake up(doubtfull) and realize there is a herd of White elephants
in our system (too much Government presence in our free enterprise system) its way too late.Sort of like Transitory Inflation.Mr.Powell can't hold a candle to Mr.Volker,and President Biden should read the book about President Jimmy Carter's years of battling inflation,by the way he was a small business owner, one of the few.Thanks